My Photos

Is the Stock Market “Liberal”?

The stock market consists of the combined actions of millions of individual and institutional investors, all over the world. These range from big mutual fund companies buying and selling stocks for their “actively managed” funds to individual investors sitting in front of their computers placing trades once in a while, to “day traders” who move in and out of stock with lightning speed. Since 2000, I’ve been a moderately-active individual investor, buying and selling mutual fund shares in my IRA’s and individual stocks in a little Roth. Lately, I have been noticing large stock-market moves based, according to the financial media (I like SmartMoney and 24/7WallStreet), on “hopes” that the European Central Bank or the US Federal Reserve will do something supposedly stabilizing to the global financial situation. So, that means that many players are betting on the “big government” of the financial world. It seems to me that what they are doing cannot materially improve the world’s finances, since they rely on methods already proven to not work, or be counterproductive (“quantitative easing”). Hope that some government entity will do something is a pretty thin reason for buying or selling any debt or equity instrument. For myself, I prefer to go with the prospects of whatever companies and funds I invest in, rather than vague hopes.
Lately, I’ve been a pretty good stock and fund picker. Even in the depths of the Great Recession, I continued to contribute to my 401(k) at work, and all my investment accounts show positive returns,